| Of course, condos are riding the swells of the multifamily wave that has gained momentum since ?08, especially in metro Boston. Cushman & Wakefield's Simon Butler (whom we snapped at last week's NAIOP event and spoke with this morning) says Massachusetts? multifamily sector has been living a charmed life during the recession with values back to the peak levels and national buyers eager for a foothold. The fundamentals tell a big part of the story. Job growth reached 40,800 by mid-April. By Q1, average rents in Greater Boston reached $1,742 compared to $1,696 a year earlier. Cap rates for core urban properties are in the 4.2% to 4.7% range compared to 6% to 7% just a year or two ago. The big difference between today's multifamily scene and that of peak years ?06 and ?07 is that pricing in the core markets is stronger than in tertiary markets like Rhode Island and New Hampshire, Simon says. |
| Simon tells us that since it takes three or four years to get new construction going in this area, it'll be a while before new supply hits the market. Only 800 new apartment units were delivered last year, he says, down from the long-term average of 4,000 a year. But developers are building. With rent growth in the CBD forecast to be an average of 8% a year through ?14, lenders are willing to take a flyer on investments and new development. Going forward, the main market drivers will continue to be jobs, restrained purchase of single-family homes, and huge demand for apartments from young professionals and families not yet ready or willing to buy. (We hope you've been kind to your soon-to-graduate interns—they're about to save your career.) |
MULTIFAMILY CHARM
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